The terms of the agreement are still being finalized, meaning the deal may still fall apart, said the people, who asked not to be identified because the talks are private. People with knowledge of the matter said in September the assets could fetch $5 billion.

The sale would bolster AT&T’s balance sheet as it undertakes a $14 billion network upgrade, plans a stock buyback that may top $11 billion, and considers acquisitions in Europe. Yesterday, AT&T Chief Executive Officer Randall Stephenson spoke at a carrier industry event in Brussels outlining a wish list of wireless policy changes that could stimulate its interest in investing in high-speed network upgrades.

U.S. tower owners have been combining through mergers, with fewer companies controlling bigger swaths of the equipment needed to transmit wireless signals amid booming demand for mobile communications.

Tower Deal

American Tower, the biggest operator of cellular towers in the U.S., agreed to buy the parent company of Global Tower Partners for $4.8 billion, including debt, last month. The company and Crown Castle are increasing their role in the wireless industry, with many carriers selling their cell sites to the companies and leasing space back.

By selling towers, carriers can focus on more profitable parts of their businesses -- similar to the movement to offload office buildings and lease them back from real estate companies. Tower operators, in turn, can lease space on their sites to multiple carriers, enabling them to squeeze more profit out of the assets.

AT&T has explored acquisitions in Europe this year and would look at Vodafone Group Plc (VOD)’s assets after the U.K. company sells its stake in a wireless venture with Verizon Communications Inc., people with knowledge of the matter have said.

Last November, AT&T said it will invest $14 billion over three years to improve the networks that deliver wireless communications, high-speed Internet access and television services.

Cash Flow

AT&T has about 10,000 towers, which generate about $326 million in annual revenue as other companies pay to lease space on the facilities, according to JPMorgan research analyst Phil Cusick. The towers may contribute cash flow of about $216 million a year, and a sale at 17-times that figure would fetch about $3.7 billion, he said in a note in August.

In addition to last month’s Global Tower deal, American Tower agreed last month to buy almost 4,500 wireless sites from NII Holdings Inc. (NIHD) in Brazil and Mexico for a total of $811 million. And a year ago, Deutsche Telekom AG (DTE)’s T-Mobile USA agreed to sell the rights to operate 7,200 cellular towers to Crown Castle for $2.4 billion.

TAP Advisors was an adviser to T-Mobile on that deal, along with Deutsche Bank AG.